China’s Stocks Retreat Most in Month on Economic Target

By Bloomberg News -
Dec 11, 2013

China’s stocks fell, dragging the
benchmark index to its biggest loss in a month, as coal
producers retreated and investors speculated the government may
cut growth targets at an economic policy meeting this week.

“There’s concern that the government will set a lower
economic growth target,” said Wang Zheng, the Shanghai-based
chief investment officer at Jingxi Investment Management Co.
“That’s triggered a sell-off of big-cap cyclical stocks, which
have dominated the broader market recently.”

The CSI 300 slumped 1.7 percent to 2,412.76. The Bloomberg
China-US Equity Index added 0.6 percent in New York yesterday.
Trading volumes in the Shanghai Composite were equal to the 30-day average today, according to data compiled by Bloomberg.

Growth Target

The People’s Bank of China will announce new loans for
November and money supply figures as early as today. Data
released yesterday by the statistics bureau showed that
industrial output rose less than estimated in November while
retail sales unexpectedly accelerated.

The government will likely maintain its targets of 7.5
percent for growth and 3.5 percent for inflation next year,
Barclays Plc economist Jian Chang wrote in a report dated
yesterday. Keeping the targets should help to stabilize market
sentiment as the government implements reforms, according to
report. The Economic Information Daily reported Dec. 4 that
China may set its 2014 growth target lower at 7 percent.

The Shanghai Composite has risen 3.2 percent since the
government vowed on Nov. 15 to allow more private investment in
state-controlled industries and loosen its one-child policy in
the most sweeping reforms in two decades. The gauge trades at
8.6 times projected profit for the next 12 months, compared with
the seven-year average of 15.2, according to data compiled by
Bloomberg.

Coal Stocks

China will have regional coal consumption control plans for
some key areas, Xie Zhenhua, vice chairman of National
Development and Reform Commission，said at a meeting yesterday.
His comments were made in statement posted on the NDRC’s
website. The plans are among efforts to curb air pollution next
year, the statement said.

Shanghai, China’s commercial hub, has had record smog this
month, prompting flight cancellations and warnings to children
and the elderly to stay indoors. The city was experiencing
“light pollution” levels this morning, according to its
environmental monitoring center.

Shanghai’s pollution hurts the city’s image as it seeks to
attract foreign businesses to its fledgling free-trade zone,
Robert Theleen, chief executive officer of ChinaVest Ltd. and
chairman of the American Chamber of Commerce in Shanghai, said
in a Dec. 9 interview.